Are Fast Cars More Expensive to Insure?

Are fast cars more expensive to insure? Not quite, and here's why.

Even just a decade ago, cars weren’t nearly as fast as they are today. In fact, 300 horsepower was expected only from V-8 engines, writes Forbes. But because of “direct fuel injection, turbocharging and other advances in engine technology and design, power and speed can be bought in a range of body styles, vehicle sizes and powertrain configurations.”

Speed — as measured by quickness of acceleration and pure engine power, and not top speed, which only matters on race tracks — is now more accessible than ever, and as Tesla just proved, as cars move to electric power, we might see faster and faster cars on the road. Tesla’s Model S is now the third fastest car in the world, writes The Verge (behind just the Ferrari LaFerrari and the Porsche 918 Spyder — both million-dollar hypercars). Upgrades to the battery allow the Model S to go from 0 to 60 mph in 2.5 seconds, making us wonder: Do the fastest cars cost more to insure?

We looked at cars people might actually drive (we’ll save concept cars and supercars for another list and another day) and calculated insurance premiums based on a standard profile: a 30-year-old single man living in Austin, Texas (ZIP: 78702), who rents his home, owns his car, has a good driving history, a good credit score, and has had consistent insurance coverage for a basic level of insurance with a national carrier. (You can view two of your credit scores, with helpful updates every two weeks, for free on Credit.com.)

Keep in mind, the time it takes for a car to accelerate from 0 to 60 mph can vary widely based on each driver’s skill, so results may vary. In no particular order (because their specs and model years differ), here are 10 of the fastest cars on the road and their stats.

1. 2017 Chevrolet Camaro
MSRP: $37,900
Engine Details: 6.2-liter V8, 455 horsepower
Acceleration Speed: 0-60 in 4.0 seconds
Average Yearly Insurance Premium for a Chevy Camaro: $1,620

2. 2016 Jaguar XJR
MSRP: $118,000
Engine Details: 5.0 Liter V8 550 HP Supercharged
Acceleration Speed: 0-60 in 4.4 seconds
Average Insurance Premium: $2,148

3. 2017 Cadillac CTS-V
MSRP: $85,995
Engine Details: 6.2-liter V, 640 horsepower
Acceleration Speed: 0-60, 3.7 seconds
Average Yearly Insurance Premium: $2,112

4. 2016 BMW M5
MSRP: $94,100
Engine Details: 4.4-liter V8 TwinPower Turbo, 560 horsepower
Acceleration Speed: 0-60 in 4.2 seconds
Average Yearly Insurance Premium: $2,112

5. 2016 Dodge Charger SRT Hellcat
MSRP: $67,645
Engine Details: 6.2-liter supercharged Hemi V8, 707 horsepower
Acceleration Speed: 0-60 in 3.7 seconds
Average Yearly Insurance Premium: $1,512

6. 2017 Audi RS 7
Engine Details: 4.0-liter V8 with two turbochargers, 560 horsepower
MSRP: $110,700
Acceleration Speed: 0-60 in 3.7 seconds
Average Yearly Insurance Premium: $2,268

7. 2017 Volkswagen Golf R
MSRP: $39,375
Engine Details: 4-cylinder turbo, 292 horsepower
Acceleration Speed: 0-60 in 4.5 seconds
Average Yearly Insurance Premium: $1,560

8. 2017 Ford Mustang GT Fastback
MSRP: $33,195
Engine Details: 5.0-liter V8, 435 horsepower
Acceleration Speed: 0-60 in the mid-4 second range
Average Yearly Insurance Premium: $1,512

9. 2016 Dodge Challenger R/T Scat Pack
MSRP: $39,995
Engine Details: 6.4-liter V8, 485 horsepower
Acceleration Speed: 0-60 in the low-4 second range
Average Yearly Insurance Premium: $1,608

10) 2017 Volvo S60 Polestar
MSRP: $60,000
Engine Details: 3.0-liter Turbocharged inline 6-cylinder 345 horsepower
Acceleration Speed: 0-60 in 4.7 seconds
Average Yearly Insurance Premium: $1,428

Compare these insurance prices with the prices of the five most popular sedans for 2017, based on our new State of Auto Insurance Report, for the same insurance customer profile.

Chevrolet Cruze
MSRP: $16,975
Acceleration Speed: 0-60 in 7.6 seconds
Average Yearly Insurance Premium: $1,056

Honda Accord
MSRP: $22,455
Acceleration Speed: 0-60 in 6.1 seconds
Average Yearly Insurance Premium: $1,176

Hyundai Elantra SE
MSRP: $17,150
Acceleration Speed: 0-60 in 8 seconds
Average Yearly Insurance Premium: $1,344

Nissan Altima
MSRP: $22,500
Acceleration Speed: 0-60 in 7.7 seconds
Average Yearly Insurance Premium: $1,260

Toyota Camry
MSRP: $23,070
Acceleration Speed: 0-60 in 8 seconds
Average Yearly Insurance Premium: $1,236

Final Word: Do Fast Cars Cost More to Insure?

Our assessment: We can’t say for sure whether or not all cars with more powerful engines that can accelerate faster always cost more to insure than their slower counterparts, but all of the faster cars above come with more expensive insurance premiums than all of the slower cars we looked at.

Another potential insurance price factor: All of the faster cars also cost more (in some cases, a lot more) than all of the slower cars. We know that price has something – though not everything – to do with insurance pricing (which is still somewhat of a mystery, even to us).

As we’ve seen, equating insurance rates with one definable feature is tough: Insurance rates weren’t strictly correlated with safety rating, either. But while we might not be able to say with absolute certainty that faster cars will mean more on your monthly premium, we do have proof that using that speed illegally is practically guaranteed to cost you.

The Insurance Consequences of Speeding Convictions

If you drive a certifiably fast car, always remember to follow the rules of the road, not only because it’s safer for you and everyone driving near you, but because beyond any traffic citations you might receive for speeding, speeding also has some pretty detrimental effects on insurance rates.

In 2016, if you were convicted of speeding, your insurance rates went up by the following percentages (national U.S. averages from The Zebra’s State of Auto Insurance Report):

  • Speeding in a School Zone: 18%
  • Speeding 6-10 MPH over the limit: 17%
  • Speeding 11-15 MPH over the limit: 18%
  • Speeding 16-20 MPH over the limit: 19%
  • Speeding 21-25 MPH over the limit: 20%
  • Speeding In 65 MPH Zone: 23%

That means if we’re looking at the national average premium of $1,323, a single speeding ticket could raise your rates from $225 to $304. (And that continues for three years after the violation occurs.)

Fast cars with great handling make for excellent driving – but stay safe (and under the speed limit!) – or you could pay in more ways than one.

Image: mevans

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7 Things You Never Knew Impacted Your Car Insurance

what-causes-car-insurance-rates-to-go-up

When searching for an auto insurance policy, there are things we expect will impact our rates: demographic details like age, home address, even credit score. But in the world of car insurance, there are still surprises, believe it or not. Below, you’ll find the top seven most surprising things that can impact your car insurance rates, taken straight from a comprehensive research report on the state of the auto insurance industry compiled by The Zebra.

1. Your History of Car Insurance — or Lack Thereof — Can Mean Big-Dollar Differences on Your Rate

If you’ve had a long history of insurance coverage, and if you’ve chosen policies with better coverage, you’ll pay less for your auto insurance. For example, in the case that you cause a collision that results in injury to another person, but you have higher coverage limits, that leads insurance companies to believe that you’re a more responsible person than someone else with a history of choosing the lowest possible coverage.

So what level of coverage do you need in order to see savings? The Zebra’s research shows that people with a five-year history of carrying $100,000 of bodily injury coverage per person and $300,000 per collision (often designated as “BI 100/300” in insurance documents) can expect to pay an average of $184 less per year for the same new insurance policy as someone with no history of insurance coverage.

Further, if you have any lapse in auto insurance coverage (even a few days), that can also cost you big time, as it indicates high-risk behavior to insurers.

Note: The only exception is for residents of California, which is the only state that doesn’t consider insurance history when determining average annual auto insurance premiums.

2. Insurance Companies Care Why You Drive

Do you drive solely to get to and from work? Do you use your car for business or to haul stuff around your farm? When you apply for your car insurance policy, the agent will ask how you use your vehicle, and your answer could have a big impact on your insurance rate. The Zebra found that prices can vary up to 18% depending on how a person uses their vehicle, even when every other detail stays the same.

People who use their vehicles on a farm will pay the least, while those who use their cars for business will pay the most for car insurance — up to $227 more each year. You can’t lie about what you use your car for, lest you risk a canceled policy, but you can make sure you tell the agent how you use your car when shopping for a policy to ensure you get the best rate (especially if you’re insuring a farm vehicle!).

3. Lying During the Application Process Can Cost You

It could spell trouble if you don’t disclose accidents and other violations when applying for insurance, The Zebra’s licensed insurance agent and expert Neil Richardson says. “Insurance companies don’t like dishonesty, so many times they will charge more for non-disclosed incidents. It pays to be honest about your driving history when you’re applying for your policy.”

4. Insurance Companies Care Whether You’re Coupled Up — & if You Aren’t, They Care Why

You might already know that married people pay less for their auto insurance policies than single folks (especially married men — a family makes men better drivers, it seems). But the rate differences became interesting when The Zebra looked at divorced and widowed people.

When a single person gets married, his or her rate will drop $74 a year, on average. Get divorced, and the rate goes right back to where it was. But if you’re married and your spouse passes away, your rates will also climb a little higher, though not as high as if you’d gotten divorced. It might not seem fair, but it’s all based on risk according to insurance company calculations.

Note: If you live in Hawaii, Massachusetts or Montana, insurers do not take marital status into consideration when calculating average annual premiums, so your policy won’t change because of it.

5. Not All Violations Are Created Equal When it Comes to Auto Insurance

Insurance companies don’t spell out exactly why there’s such a discrepancy among rates for each violation, but The Zebra’s research shows common violations vary widely — and vary among states. For example, speeding, causing a collision (“at-fault accident”), driving recklessly, racing or driving under the influence of alcohol will all raise car insurance rates at least a couple hundred bucks — and as much as several thousand. A DUI will raise rates more than 100% in seven states, more than 200% in Hawaii and more than 350% in North Carolina. And although DUIs increase average annual premiums the most nationally, 23 states cite racing as the costliest violation.

Further, penalties for various violations don’t appear to correlate closely with safety risk. Texting and driving can be as dangerous as driving under the influence of drugs or alcohol, but you’ll pay a lot more for your auto insurance if you’re caught doing the latter. The Zebra’s research found that a DUI will make a driver’s car insurance rate 3,200% higher than a texting-while-driving violation would.

6. Insurance Companies Factor Your Highest Level of Education Into Your Rate

The Zebra averaged savings across all 50 U.S. states and Washington, D.C., and found that, nationally, people with a bachelor’s degree save $32 more each year than people without a high school diploma. Keep in mind that this is an average, though, so depending on where you live, your degrees could have an even greater impact. In Delaware, for instance, a person with a PhD will pay $131 less than someone without a high school diploma, all else being equal.

Richardson says that customers are often surprised, and sometimes even offended, when asked about the highest level of education they’ve achieved, and some would choose not to disclose the information. But, says Richardson, “choosing not to disclose your education level can cause your rate to be higher because the default option for education level would be the lowest tier — a designation of ‘no high school or diploma.’”

7. How Long You’ve Had Your License Will Affect Your Insurance Rate

The length of time you been licensed to drive can also impact your rates, says Richardson, because this is a strong indicator of the amount of driving experience you’ve had. If you have been licensed for fewer than three years you will most likely pay higher rates than someone the same age who has been licensed for more than three years.

You might feel frustrated that many of the factors that determine your auto insurance policy rate are beyond your control (you can’t — or shouldn’t — get married just to save a few dollars on your auto insurance, for example). But it’s still important to know the details of how your insurer might determine your rate. This way, you can always make sure to ask the agent to consider every factor that might lower your rate when you’re shopping around (which you should do about every six months to a year).

Remember, your credit score can also affect your ability to qualify for car insurance. You can see where you stand by viewing a free credit summary on Credit.com.

Image: Tomatopictures

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3 Things That Can Get You Dropped From Car Insurance

dropped-by-car-insurance

We’ve explored some of the most common reasons car insurance policies are canceled: things like failing to pay the premium, fraud, making unapproved modifications that change the value and functionality of your car, having your license suspended or revoked, and major moving violations (especially DUIs or DWIs). But here we’ll explore some of the ways drivers end up getting dropped from their insurance policies that have nothing to do with their driving records — or anything they’ve done.

Finding yourself stuck without auto insurance coverage is against the law (if you’re still driving) and potentially financially ruinous if you are involved in a crash. Plus, when you do find an insurance company, the gap in your coverage will almost always mean a higher premium. So avail yourself of the following scenarios and do your research. And it’s never a bad idea to do a little insurance shopping so you have a backup in mind, just in case. (Before you apply, be sure you know where your credit stands, as it could affect your rate. You can view two of your scores, updated each month, for free on Credit.com.)

1. Health Issues

Several states have laws on the books stating that car insurance companies can drop customers who develop health problems that could make driving unsafe. For instance, epilepsy, a condition that causes seizures, is a medical issue for which many states permit insurers to drop customers, unless they can prove the condition won’t affect their driving. But luckily it isn’t a straight line from diagnosis to loss of insurance. The Zebra’s insurance expert, Neil Richardson, explains:

Epilepsy and serious illnesses become an insurance issue only after they have become a driver’s license issue. If your doctor notifies the DMV or court that you are not fit to drive due to a medical issue, then your license can become suspended until the doctor updates your status or you dispute the doctor by filing an appeal with the DMV. Your insurance company then drops you because of your license status, not for a specific health reason.

Technically, says Richardson, any health problem that doctors deem serious enough to make them revoke driving privileges could lead to loss of coverage (but then, you can’t drive without a license, so the loss of insurance coverage becomes moot). Some possible examples of illnesses that might put your insurance coverage in jeopardy are unstable diabetes, heart conditions, arthritis, chronic depression, substance addictions or aggression. Some illnesses and conditions will only require a license restriction (like no driving at night or the required use of corrective lenses). If you develop a serious illness or medical condition, keep in mind that it could become a license and insurance issue.

And what if you develop a medical condition that could be deemed serious enough for a doctor to revoke privileges but your doctor doesn’t? Can you find yourself with a retroactively cancelled policy in the event you need to make a claim? Richardson says that if your doctor doesn’t give notice to the DMV or the courts, the insurance company wouldn’t have a leg to stand on if they tried to deny a claim. Further, insurance companies might cancel policies upon notification of a change in license status, but only if there is a driving restriction in place. “It’s just part of the risk that insurance companies assume when they write a policy,” Richardson says.

As always, if you develop a health issue and worry it’ll cause you to be dropped, you should still tell your insurer if you’re a current policyholder, rather than trying to hide the truth. And if you’re shopping for new insurance, you must tell potential insurers, or risk your policy being voided. If you get into a wreck or need to make a policy claim for any reason and your insurer does a little digging and discovers your secret, they most likely won’t pay and you’ll be left uncovered anyway. Better to know before an emergency and make a plan of action.

2. Making Multiple Claims in a Short Period 

Even if you’re the victim of crime or experience an extreme weather event and need to make a claim, it can spell trouble for your insurance policy. It might not seem fair, but the auto insurance industry is built on calculating risk, and making too many claims is a good way to up your chances of having your policy cancelled or not renewed. Richardson says that claims, just like tickets and crashes, stay on your driving record for three years. Filing more than one claim per year could cause your insurance company to drop you. So, say your vehicle is vandalized a few times, or stolen, or your vehicle is carried away by a flood, you’ll make a claim with your insurer, and rightfully so, but making too many claims (of any type) can make you too expensive of a customer to keep around.

Keep in mind: There is an important distinction between a canceled policy and a policy non-renewal. The former causes your coverage to end immediately, even if your policy term isn’t up, while the latter means you can finish out your term with your current insurance company but will need to find a new one at the end (usually six to 12 months). In most cases, when too many claims are filed in a short period, insurers will opt for non-renewal of your policy, rather than suddenly canceling it. It’s not a great situation to be in, but it’s relatively better than being dropped.

If you’ve been dropped from your current insurance, it’s important to find a new policy as soon as possible, and if you know your policy won’t be renewed, you should start shopping around for a new policy as soon as you can.

3. Your Auto Insurance Company Shuts Down in Your Area

This scenario is a definite case of “it’s not you, it’s me.” Businesses fail all the time, and auto insurance companies are not immune. Even subsidiaries of national brands can shutter, leaving part (or all) of your insurance portfolio up in the air. Fortunately, there are steps you can take to reduce the chance of signing on with an insurer that is more likely to fail.

  • Check out their rating: A.M. Best ratings, J.D. Power ratings and J.D. Power’s claims satisfaction survey are all good places to start. Good ratings show financial strength and business staying power.
  • Only purchase insurance from licensed companies and agents — not only will you ensure the company meets your state’s financial requirements, you’ll be certain a guaranty association is available to pay outstanding claims in the event the business fails.
  • Look at your state’s auto insurance complaint index, which compares complaints across different insurers so you can see where each company falls on the spectrum.
  • Get help from your state’s department of insurance help line or website. You can learn about license status, financial ratings and complaint history — all important factors when choosing an insurer.

Auto insurance companies can’t drop customers without cause (except during a new customer’s trial period, which usually lasts 60 days from first sign-up), so if you think you may have been illegally dropped from your auto insurance, check out your state’s laws with their department of insurance.

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Image: Rostislav_Sedlacek

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